If you’re buying/selling cryptocurrency, a crypto tracker is a must-have tool. You’ve probably noticed that the crypto market is becoming just as complex as the stock market. And the Canadian Revenue Agency has been paying attention, too. So it’s crucial to stay up-to-date with your crypto sales and trades with a great crypto portfolio tracker.
What does it do?
Consider a crypto portfolio tracker to be a central website/app where you can keep track of all movements of your cryptocurrency. It’s an essential tool for all crypto investors as they allow you to monitor price changes at all hours of the day, track your investments and other key metrics. You’ll see at a glance what your assets are worth, which coins are doing better than others, and then use it to rebalance your overall investments.
Why you’ll want to use a tracker
First off, everything is in one place, so you don’t forget about any coins. Not long ago, keen traders used to spend time updating custom spreadsheets to keep track of their crypto holdings. Not anymore; there are apps for that now.
Second, the CRA has issued a guide that virtual currencies are now treated as commodities under the Income Tax Act: “Any income from transactions involving cryptocurrency is generally treated as business income or as a capital gain, depending on the circumstances.”
The CRA has the right to request account holder info from exchanges since any income from transactions involving crypto is treated as a capital gain or as business income, depending on the circumstances. Any losses are considered to be capital losses or business losses. If you hold more than one type of crypto in a digital wallet, each type is regarded as a separate digital asset and is valued separately.
Whether earnings from crypto are treated as business income or capital gains depends a lot on the holder’s behaviour. If you’re buying and selling every week, the CRA will probably consider that a business, although there’s no clear line between a capital gain or a business gain. No matter, if you’ve sold for profit, you must declare those gains. 50 percent of capital gains are taxed as an investment income, and 100 percent of net income is taxed as a business gain. You’ll need solid documentation to help fight audits, review letters, or a trip to tax court. So, the best time to document is now, because you won’t be able to reproduce the information three years down the line if/when you’re asked about it.
Use a crypto portfolio tracker technology to save you money; otherwise, you will eventually pay someone to collect all the information you give them. Your tax accountant will need this information, so pay attention now to save a ton of money in the future.
Which events are taxable?
Although owning cryptocurrency is not taxable. But, you may have to pay taxes to the CRA for doing any of the following:
- selling or gifting crypto
- trade or exchange crypto, including getting rid of one to get another
- convert crypto to government-issued currency, such as Canadian dollars
- use crypto to buy products or services
If you only want to be paying tax on 50 percent of gains, don’t buy, trade, and sell every week. Pick the ones you like and keep them. You don’t have to be afraid you’re going to be taxed for holding crypto; it’s when you give it up. The sale or trade is a taxable event.
What’s a good tracker?
FTX, formerly Blockfolio, is a complete crypto app, with the latest prices for over 10,000 cryptocurrencies. Other options for Canadians include CoinTracker, Sharesight, and CoinTracking. Crypto portfolio trackers like these give you insight into the entire cryptocurrency market, expand your knowledge, and help you discover coins that might not currently be listed on your exchange of choice. You’ll be able to trade various digital assets like Bitcoin, Ethereum, Solana, and Dogecoin with low trading fees.
Your crypto portfolio tracker will be customized based on you, as it tracks the coins you are interested in and own. It will connect to the exchanges/wallets/services you use and provide a (.csv) download with detailed information on each ‘transaction’, not just when you bought or sold. Different assets can also be included in a tracker, including stocks, bonds, equities, et cetera. These trackers can help you, as an investor, to evaluate your investments and help you decide whether or not to trade on these assets.
TurboTax x CoinTracker
The Canadian crypto space is quickly evolving. CoinTracker’s recently announced an exclusive partnership with TurboTax to make it easier for crypto users to calculate and file their crypto taxes. According to TurboTax, they’ve seen the number of people with crypto transactions more than triple in recent tax seasons, increasing 362%. TurboTax says it can now import up to 4,000 crypto and 10,000 stock transactions.
If you’re a CoinTracker user, you can file your crypto taxes through TurboTax with a simple login experience to sync their tax calculations. CoinTracker-computed capital gains will automatically be factored into the rest of your tax return, so there’s no more downloading CSV files and manually uploading transactions if you choose CoinTracker.
CoinTracker has a pretty seamless auto-import experience from 14 of the top exchanges, including Binance.US, Coinbase Pro, FTX.US, and Bittrex for those who have 100 percent of their crypto transactions on one exchange. Those users who have transactions across wallets or exchanges will be sent to CoinTracker to pull together their complete portfolio and taxes with an easy transition back to TurboTax. Any new users who start their experience on TurboTax can accurately calculate their tax liability with CoinTracker and then sync their data back to TurboTax.
There are some great crypto portfolio trackers in the market that should satisfy beginners and more advanced users. Since Blockfolio joined forces with FTX, they’ve become an even more popular option for crypto trading, tokenized stocks (outside the US), NFTs, as well as earning yield on assets. But, CoinTracker’s coming up very strong by teaming up with TurboTax by making it fast and easy to import and accurately report your investments. Do some research to figure out which option is right for you. You’ll be happy you did at tax time.